EL-Encashment Dilemma: Should It Be Based on Current or Past Salaries? Seeking Guidance

Dear Sir,

We are paying EL-Encashment to our employees for 2008 & 2009 (2 years). Now the question is, should EL Encashment be calculated based on the current gross salary drawn, i.e., 2009 December salary, or the respective year's gross salary, i.e., 2008 EL for 2008 December gross & 2009 for 2009 gross? Which one is correct as per government norms?

Please guide me, sir.

Thanking You,
Ramesha

We are paying EL-Encashment to our employees for 2008 & 2009 (2 years). Now the question is: should EL Encashment be calculated on the basis of the current gross salary drawn, i.e., 2009 December salary, or the respective year's gross salary, i.e., 2008 EL for 2008 December gross & 2009 for 2009 gross? Which one is correct as per government norms?

Please guide me, sir.

Thank you, sir.

Ramesha

Dear Sir,

We are paying EL Encashment to our employees for 2008 and 2009 (2 years). Now the question is: should EL Encashment be calculated based on the current gross salary drawn, i.e., the December 2009 salary, or the respective year's gross salary, i.e., the 2008 EL for 2008 December gross and 2009 for 2009 gross? Which one is correct as per government norms?

Please guide me, sir.

Thank you, Sir.

Ramesha

Dear Ramesha,

You are to consider the current salary of the employee when he is accepting the EL encashment and you are offering it.

With Regards, R.N.Khola

QUOTE=Ramesha.A;996198]
We are paying EL-Encashment to our employees for 2008 and 2009 (2 years). Now the question is, is EL Encashment to be calculated on the basis of the current gross salary drawn, i.e., 2009 December salary, or respective year gross salary, i.e., 2008 EL for 2008 December gross and 2009 for 2009 gross? Which one is correct as per government norms? Please guide me, sir.

Thanking You, Sir
Ramesha
[/QUOTE]

Dear Ramesh,

Please calculate the current wage rate. Also, note that the accumulation of leave should not exceed 30 days in any case.

For example, if one of your employees worked 250 days in 2008 and 250 days in 2009, then the total leaves would be 500/20=25, resulting in a total leave balance for that particular employee.

It is subject to your company policy whether you want to encash these leaves now or carry them forward, as you can keep up to 30 leaves in an employee's account.

Best Regards,
Sajid Ansari

EL is normally given to an employee based on the leave earned by way of the previous year working. Likewise, the employee can avail leave or accumulate it over the years to a limit as decided upon by the concerned firm or company to be used by the employee in the future for his own purpose. The accumulated EL of an employee becomes a liability for the company. So if the employee decides to encash it, then the future liability of the company or firm decreases. The value of EL is determined based on his Basic Pay and Dearness Allowance (per day basis). Therefore, an employee can encash accumulated EL, say 30 days in a year, if the EL balance is more than 30 days. If it is less than 30 days, then only half the leave in his balance can be encashed. EL encashment is normally referred to as the encashment of leave accumulated (i.e., EL not used) over the years in the entire service period.

Hi,

Leave encashment should be done based on the last drawn salary/wage at the time of cashing in the leaves.

Mohan Rao Manager, HR

Dear Ramesh,

You have to calculate EL for encashment based on the current month's gross or basic salary.

Regards,
Kumar

Dear Ramesh,

For payment of leave encashment, only the components of basic + DA should be considered, rather than the gross salary. The calculation must be done based on 26 days, instead of 30 or 31 days.

Thanks & Regards,

Sumit Kumar Saxena
9899669071, 0120-4131277

Dear Remesha,

EL Encashment for the years 2008-2009. Both years to be calculated within the gross pay of December 2009 based on the existing salary only.

Siva

Dear Friends,

Mr. George has rightly said that EL accumulation or encashment is totally dependent upon the policy of the company, and the rules are generally different for different levels of people. For example, workmen/associates will have EL as per the Factories Act 1946/Certified Standing Orders, whereas Officers/executives generally have a higher number of EL. In some companies, the criteria for granting EL to Officers are based on the total length of service and/or experience in that organization. Thus, there is subjectivity in the practice of allotting EL to employees.

Similarly, encashment also has different connotations. However, the most commonly adopted practice is to encash the accumulated EL with the last drawn salary, which includes only Basic and DA components.

Nirmal

Mr. Sumit Kumar,

Why should we consider only 26 days rather than 30 or 31 days for encashment? Moreover, as per the Factories Act, only the gross salary should be considered, but companies still persist with encashing leave based on the basic+DA pay. Correct me if I am wrong.

Regards,
Kangeyan

Dear Ramesh,

Payment of EL depends on the salary you deduct. In case you deduct Gross Salary for any specific reason (example: LOP, Absent, No Proportionate Leave, etc.), then you have to pay Gross Salary as EL (current Gross Salary). If you deduct basic salary for the above said reasons, then you have to pay EL as per Basic Salary (Current Basic Salary).

Regards,
Krishna T B R

I am the HR head in an Indian multinational company. I need simple help from all of you. What are the provisions and minimum accumulation of the EL/PL for the past years in U.P.?

Regards,
Anil Kumar

Dear Kangeyan, you are correct that the existing salary would be considered for encashing leave. However, the consideration should be for 26 days only. This is because the calculation of leave should be based on working days, not paid days. Therefore, 26 days should be considered the working days for months with 30 or 31 days, while 24 days should be considered for months with 28 or 29 days.

Thanks & regards,
Sumit Kumar Saxena
[Phone Number Removed For Privacy Reasons], [Phone Number Removed For Privacy Reasons]